Public Policy,Vested Interest,and Common People in Brazil in the Twenty-First Century

We offer an original institutional approach to analyzing policies meant to regulate the actions of common people in the Brazilian state agenda in recent years. We also address the reactions of vested interests against this agenda. Such vested interests rely on corporations’ ceremonial encapsulation of state policies — policies that were established during the decades when Brazil’s industrialization process took place. Brazilian policies for the common people, however, are a twenty-first-century phenomenon.     

International Monetary Reform: A Review Article

Original institutional economics (OIE) has three significant, but apparently contradictory, definitions of institution(s) stemming from Thorstein Veblen, John Commons, and J. Fagg Foster. In this first installment of a two-part paper I address this apparent contradiction by developing an "irenic reconciliation" of these definitions using a methodological approach I call "critical institutionalism"— a synthesis of the OIE in the tradition of the Veblen, Commons, and Foster, the pragmatism theory of Charles Sanders Peirce and John Dewey, the critical realist methodology of Margaret Archer, and the critical realism of Roy Bhaskar. In so doing, I provide an alternative discussion to that of some current institutionalists who propose to replace the existing OIE definitions of institution(s) with "consensual definitions" developed in the discourse with non-OIE traditions. I propose that there is still considerable analytical value in the OIE definitions, and that replacing them with non-OIE-originating concepts would unnecessarily carry OIE away from its methodological and philosophical roots. In the second installment of this paper (yet to be published), I proceed to demonstrate the analytical value these "reconciled" definitions have for the OIE project.     

Do institutions for collective action evolve?

In this paper I will provide an overview of our findings from studying irrigation systems in the field so that readers who are not familiar with our prior research gain at least an initial sense of these findings. I will provide a second short overview —this time of the institutional analysis and development (IAD) framework offering a general method for doing institutional analysis. I will then introduce the possibility of looking at the change of rules as an evolutionary process. The method for studying the evolution of rules will be based on the IAD framework and on our long-term study of rules related to irrigation systems. In the conclusion, I return to the question as to why it is important to authorize resource users’ relative autonomy in the development of their own rules and to learn from the resulting institutional diversity.     

Market, civic virtues, and civic bargaining in the medieval and early modern age: some evidence from sixteenth century Italy

In the last decades, historians have shown that the modern market is rooted in the institutional system created in European towns since the middle ages. This approach leads us beyond the usual opposition between market and society or between public and private market. Indeed, in the medieval and early modern age, the market was part of a wider institutional design of civil life, which had a basic conceptual frame of reference in the notion of the common good, a feature typical of such organicistic and hierarchical societies. This paper explores the process of market construction in the medieval and early modern age. I firstly analysed the role of the market in these societies and then focused on the case of foodstuff provision: a key element of the non-written, ancient pact between rulers and people, based on the assurance of subsistence. As a basis for the study, I employed sixteenth century documents regarding Vicenza, a medium-sized town in the Republic of Venice. These show very clearly that, in general, market and price regulation was not the result of arbitrary interventions by public authorities; on the contrary, it was the result of a process of negotiation, which I call civic bargaining. This process involved??to various degrees??public authorities, landowners, merchants and guilds, and the town??s people, the pursuit of the common good being, in practice, a matter of balancing various needs and interests. Present-day economic and social public policies are, in many aspects, an inheritance of the institutional system created in the medieval and early modern age: knowledge of these origins is useful in the present debate regarding economic versus social development, as discussed at the end of the paper.     

Competition and Public Policy in the Nursing Home Industry

A theory of property needs to give an account of the whole lifecycle of a property right: How it is initiated, transferred, and terminated. Economics has focused on the transfers in the market and almost completely neglected the question of initiation and termination of property in normal production and consumption (not in some original state or in the transition from common to private property). The institutional mechanism for the normal initiation and termination of property is an invisible hand function of the market — the market mechanism of appropriation. Does this mechanism satisfy an appropriate normative principle? The standard normative juridical principle is to assign or impute legal responsibility according to de facto responsibility. It is given a historical tag of being "Lockean," but the basis is contemporary jurisprudence, not historical exegesis. Then, the fundamental theorem of the property mechanism is proven, which shows that if "Hume's conditions" (no transfers without consent and all contracts fulfilled) are satisfied, then the market automatically satisfies the Lockean responsibility principle — i.e., "Hume implies Locke." As a major application, the results in their contrapositive form, "Not Locke implies Not Hume," are applied to a market economy based on the employment contract. I show that the production based on the employment contract violates the Lockean principle (all who work in an employment enterprise are de facto responsible for the positive and negative results), and thus Hume's conditions must also be violated in the marketplace (de facto responsible human action cannot be transferred from one person to another — as is readily recognized when an employer and employee together commit a crime).¹     

Bringing institutions into evolutionary economics: another view with links to changes in physical and social technologies

Like Nelson (2002), I make a case for bringing institutions into evolutionary economics. But unlike Nelson, who defines institutions as social technologies consisting of rules-routines, I define them in agreement with North (1990) as humanly devised rules-constraints - such as formal law and informal social norms - but also view them, to accommodate most of Nelson's approach, as constraining the variety of rules-routines employable by agents. I show that this definition has advantages for communicating with modern institutional analysis, for clarifying how institutions can influence, and be influenced by, changes in physical and social technologies, and for producing policy implications.JEL Classification: B52, B15, N01, A10I thank Niclas Berggren, Thrainn Eggertsson, Gunnar Eliasson, Geoffrey Hodgson, Dan Johansson, Nils Karlson, Staffan Laestadius, Richard Nelson, Mark Perlman, Viktor Vanberg, Gerhard Wegner, the participants of seminars at the University of Jena and the Royal Institute of Technology in Stockholm, and two anonymous referees for valuable comments on earlier drafts.     

American Unionism: From Protest to Going Concern

This article is the companion to "Pragmatism(s) Plural, Part I" which argued the virtue of classical pragmatism (of C.S. Peirce and John Dewey) as a methodological and philosophical adjunct to empirical inquiry in political economy. This article briefly examines the use of "pragmatism" to refer to philosophical positions having little to do with classical pragmatism and which are generally antithetical to it. Succeeding sections indicate how W.V. Quine, Richard Rorty, Karl Popper and others are associated with distortions, misreadings, and baseless criticisms of classical pragmatism — or more often of imagined or phantom versions of classical pragmatism. These other "pragmatisms" block more effective inquiry by substituting philosophical attacks and rationales for ongoing, evidential criteria.     

制度变迁中的制度构建失灵及其解决模式--义乌小商品市场变迁的案例研究

本文指出,现有市场主导型(需求诱致性)和政府主导型(供给强制性)制度变迁理论存在许多的问题.它没有对为什么有些制度变迁是成功的而有些却是以失败告终的给出解释,也没有理清两种制度变迁模式相互作用的规律以及相互转化的条件.本文以义乌小商品市场制度变迁案例的研究为线索,试图弥补这些缺陷,并得出了以下结论:(1)单纯的市场主导型制度变迁或政府主导型制度变迁都可能以失败告终,因为单一的制度变迁引导机制无法很好克服制度变迁机制中所面临的"制度构建失灵"问题--市场力量无法提供制度变迁中所必需的公共品,政府力量无法很好解决制度变迁中的利益共融与信息冲突的问题;(2)成功的制度变迁需要通过结合诱致力量和强制力量来解决公共品提供不足以及利益冲突等问题,因此,制度变迁方式的转换以及共融利益关系的形成是制度变迁成功的核心.     

Are modern philosophical accounts of well-being excessively ‘individualistic’?

Do modern accounts of well-being which have influenced, or been adopted by, some economists encourage excessive ‘individualism’? I suggest that this question can be answered by considering two objections to modern views of welfare: (1) that they involve an impoverished view of persons and (2) that they decompose all goods into goods for individuals and do not give intrinsic value to collective goods. I argue that two influential views of well-being—the informed desire view and the capability approach—can convincingly respond to these objections. Both views allow for our distinct social roles and identities: the ways in which social norms and institutions shape values and a concern for others. Neither view sees goods as goods only of specific individuals, nor do they require us to separate out neatly the realisation of values in the lives of various individuals. But that does not imply that goods such as friendship are collective rather than individual goods or that collective goods have intrinsic value. Nonetheless, accounts of well-being may need to be more explicit than they have been in incorporating the social dimension.     

Rethinking the Foundation of the Original Institutional Economics Policy and Reform Program: Reactions to Thomas C. Leonard’s “Illiberal Reformers”

John R. Commons, among other original institutional economists, argued for the interests of the common people against the power of vested interests in politics and business. Against this backdrop, a new book by Thomas C. Leonard contends that, in fact, these same economists were actually “illiberal” and only promoted the interests of certain groups, such as Anglo-Saxon men, and were against the progression of minority populations, women, or the disabled. But Leonard’s argument that these economists were “illiberal,” and that their entire reform program related to the role of government in the economy and the creation of the administrative state, is essentially defunct. As Leonard (2016 Leonard, Thomas C. Illiberal Reformers: Race, Eugenics and American Economics in the Progressive Era. Princeton, NJ: Princeton University Press, 2016. [Google Scholar], xiv) writes in the prologue, “expertise in the service of the administrative state, what progressives call social control, has survived the discredited notions once used to uphold it.” We respond to Leonard’s book by offering a direct critique of the arguments he makes. We argue that Leonard — at least partially — takes the founders’ view on these issues out of context, and that even where some of their views would be refused by today’s institutional economists, it does not mean that the entire reform project is rejected.     

Instrumentalism and Economic Policy: The Quest for Reasonable Value

Neuroeconomics and behavioral economics (NEBE) is one of the most dynamic fields in contemporary economics. However, from the viewpoint of economic methodology there are still substantial reasons why NEBE is irrelevant for economic theory. This paper argues that they will only become an essential part of economics if they are embedded into a fully-fledged institutional and evolutionary paradigm. I develop a Neo-Veblenian theory of the individual that starts out from the observation that modern brain sciences do not support the notion of the brain to be an integrated and consistent rational decision apparatus. An evolutionary explanation is offered for this, which reinstates Veblen's distinction between adaptation as engineering optima and social selection. Individual identity does only emerge through communication and interaction among brains, in particular via language. The concept of the "extended brain" is proposed, which is applied to define human individuality as a social phenomenon. Thus, the systematic unity of neuroeconomics and institutional economics is established.     

CORRUPTION AND SCHUMPETERIAN GROWTH IN DIFFERENT ECONOMIC ENVIRONMENTS

This paper takes up the phenomenon of corruption and its relationship to growth explicitly in conjunction with overall institutional environment in which it occurs. The literature has pointed out that some forms of corruption are more detrimental to growth, while others can be considered even beneficial, given the underlying regulation. These notions are made more precise in a framework of Schumpeterian growth in "capitalist" and "totalitarian" environments. The analysis shows that corruption in an overall competitive capitalist environment ordinarily is of a transitive nature and is likely to be conducive to economic growth rather than otherwise. On the other hand, in totalitarian environment, corruption, though also possibly conducive to static welfare, becomes deeply entrenched in the socio-economic system and inevitably leads to a breakdown of the system. That breakdown, in turn, greatly enhances the possibilities for corruption and makes it especially detrimental to the prospects for resumed economic growth.     

The law and economics of sycophancy

Tullock (in: Rowley (ed) The selected works of Gordon Tullock, Liberty Fund, Indianapolis, pp 399–455, 2005) was skeptical of the presumed economic efficiency of the common law, as adversarialism, apparently inherent to common law procedures, allowed for and was prone to litigiousness. Common law litigations accord to patterns of rent-seeking, as litigants invest ever more resources to assure victory. This paper asks if viable institutional solutions can emerge to resolve the problem Tullock identified. I survey the historical development of the term sycophancy within ancient Greek law as a revealing case study. Though a relatively innocuous pejorative in contemporary parlance, the term’s etymological roots stem from a formative process of ancient legal and institutional change within Athenian Greece. In the wake of specific legal reforms that expanded the scope of governmental authority under Solon (born 638–558 BCE), citizens were given explicit financial incentive to report violators of newly implemented public laws. Thereafter, social stigma surrounding third party legal representation leveraged the term sycophancy in reference to prosecutors motivated by private interests over the public welfare. Forgone social status and eventually formal criminal sanction emerged as offsetting differentials against the incentives of sycophancy.     

Corruption,remittances, and public goods: A unified framework

Remittances are an important source of income for the very countries afflicted by high levels of corruption. However, corruption undermines the development potential of remittances. With this in mind, we propose policy reforms that harness the potential of remittances while mitigating corruption. Unlike previous studies, we point to two channels: (1) the corrupt government's trade-off between its financial interests (corruption), the provision of a public good, and the gains from a higher inflow of remittances; and (2) the household's consumption of the public good relative to that of the privately obtained substitute of the public good.     

官商结盟的体制效应——以近代中国民营企业发展为例的分析

开放经济条件下,在一个相对集权的体制中,为规避潜在的风险,民营企业通常会采取"消极适应或积极适应"两种发展形式。"以牺牲企业对外部(技术、市场)变化适应性为代价换取产权安全"的消极适应型发展的直接后果是使得政府提升国家产业竞争力的努力受挫。与消极适应型发展模式不同,一些民营企业会选择积极适应型的发展模式,即通过寻求官方庇护的政治方式来确保创新收益安全,企业发展与滋生腐败之间极易发生联系。"‘腐败’成为企业发展‘润滑剂’"现象的出现,侵蚀了国家政治体制,加剧了政府和社会大众的不满,客观上加大了企业发展面临的潜在风险。体制"怪圈"的形成,既不利于国家竞争力的提升,又极可能引发政府统治的合法性危机。本文分析表明,只有将民营企业从坏体制"始作俑者"的角色中解放出来,才能破解体制怪圈。这需要从根本上改变民营企业"既是被需要的,同时又是被歧视的"尴尬处境。中国近代史上有关民营企业发展的案例为本文假说提供了丰富的实质性内容。     

制度变迁是自然无序的还是历史必然?——论演化思潮的复兴对马克思主义经济学发展的意义

马克思主义经济学与现代演化经济学具有相同的研究传统,都强调用历史和演化的观点来分析经济问题,都强调技术进步在制度变迁中的意义,但两者的制度演化观有着本质区别。前者强调生产力在社会发展中的决定意义,并认为社会由低级向高级的发展是历史的必然。后者强调创造性的个人心智在制度变迁中的源泉作用,并强调演化的无目的性、无方向性和多样性。因此前者贯彻的是唯物哲学观,后者渗透的是唯心观。霍奇逊的演化标准从侧面印证现代演化论者决不是马克思主义者。     

JUST A BIG MISUNDERSTANDING? BIAS AND BAYESIAN AFFECTIVE POLARIZATION

I present a model of affective polarization—growth in hostility over time between two parties—via quasi-Bayesian inference. In the model, two agents repeatedly choose actions. Each choice is based on a balance of concerns for private interests and the social good. More weight is put on private interests when an agent's character is intrinsically more self-serving and when the other agent is believed to be more self-serving. Each agent Bayesian updates about the other's character, and dislikes the other more when she is perceived as more self-serving. I characterize the effects on growth in dislike of three biases: a prior bias against the other agent's character, the false consensus bias, and limited strategic thinking. Prior bias against the other's character remains constant or declines over time, and actions do not diverge. The other two biases cause actions to become more extreme over time and repeatedly be “worse” than expected, causing mutual growth in dislike, that is, affective polarization. The magnitude of dislike can become arbitrarily large—even when both players are arbitrarily “good” (unselfish). The results imply that seemingly irrelevant cognitive biases can be an important cause of the devolution of relationships, in politics and beyond, and that subtlety and unawareness of bias can be key factors driving the degree of polarization.     

Entrepreneurship,trust and corruption

I propose a theoretical model where trust towards strangers is a channel through which institutions determine economic outcomes, in particular, entrepreneurship and corruption. More importantly, I show that the role of trust has been overlooked since high levels of trust do not always enhance desirable economic outcomes. Trust helps individuals to participate in economic exchanges aligned with social welfare, but it also facilitates individuals to cooperate for the achievement of corrupt deals. Under this more general view of trust, the model generates a non-trivial new prediction at the individual level. Specifically, the individual-level relationship between honesty and trust changes depending on the institutional quality of a country. Dishonest individuals are the more trusting individuals in countries with poor institutions, and the less trusting in countries with good institutions. Using individual-level data of 80 countries from the World Value Survey and the European Values Study, I present empirical evidence in support of this prediction.     

官僚体制中的契约与激励机制——对转轨经济中官员腐败的一个新解释

本文主要运用信息经济学基本理论从一个新的视角对转轨经济中官员的腐败行为加以解释。通过模型我们首先证明 ,在完全信息条件下官僚集团的廉洁与效率可以同时达到。随后我们推出在不完全信息条件下的统制经济中 ,统治者要有效地激励官员必然要以特权为手段 ,以效率为代价 ,而这恰恰构成了将来经济转轨过程中官员腐败的主要潜在因素。最后 ,我们可以看到 ,在统治者主导的制度变迁中 ,腐败主要来自两个方面的原因 :一是来自于统治者保持官僚集团内部效率的需要 ,二是来自于企业家与统治者在信息水平和激励能力上的差异 ,前者具有负效应而后者具有正效应。制度变迁的最终结果是使官僚集团的规模与统治者的信息水平一致 ,从而实现经济效率与社会公正。     

Governance during Social Transformations: Challenges for Africa

The governance advice that is offered to Africa usually identifies a list of ‘good governance’ goals like stable property rights, a rule of law, low corruption and government accountability as preconditions for development. These goals are difficult to implement not only because they are expensive public goods but in addition their enforcement is typically at variance with powerful interests in the political settlements of developing countries. The historical evidence and much institutional theory suggests that during their social transformations successful developing countries had a different set of ‘developmental’ or ‘growth-enhancing’ governance capabilities that enabled their states to support critical property rights transformations and assist firms in acquiring and learning to use new technology. The institutions and policies they used differed because their political and institutional starting points were different. There are therefore no blueprints for Africa or anywhere else, but certainly the good governance menu is unrealistic. Rather African countries have to experiment and develop institutional and policy solutions that work in their context and which are appropriate for transforming property rights and accelerating technology adoption.